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How Silicon Valley CEOs Conspired To Suppress Engineers' Wages
Oneflower writes "As we discussed last week, a lawsuit is moving forward that alleges widespread conspiracy among the CEOs of Apple, Google, Intel, Adobe, Intuit, and Pixar to suppress the wages of their tech staff. Mark Ames at Pando explains how it happened, and showcases some of the emails involving Steve Jobs and other CEOs. Quoting: 'Shortly after sealing the pact with Google, Jobs strong-armed Adobe into joining after he complained to CEO Bruce Chizen that Adobe was recruiting Apple’s employees. Chizen sheepishly responded that he thought only a small class of employees were off-limits: "I thought we agreed not to recruit any senior level employees. I would propose we keep it that way. Open to discuss. It would be good to agree." Jobs responded by threatening war: "OK, I’ll tell our recruiters they are free to approach any Adobe employee who is not a Sr. Director or VP. Am I understanding your position correctly?" Adobe’s Chizen immediately backed down.'"
There's a knock-on effect... for those of us not employed at the named offenders, the salaries are suppressed. I hope they're convicted.
You'd think, from a free-market standpoint, that collective bargaining would somewhat equalize the sale and purchase of labor.
But nah, us engineers are too smart for that. We're all superstars and we're always looking to stab eachother in the back for a percentage.
Collusion, by definition, is not a free market.
When you think of a model of the "free market", think of hundreds or thousands of small merchants gathered in a town square hawking their goods, with many of them selling similar items.
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If only the tech workers of the world had a touch more self and class-consciousness, they'd be able to see that, often, management is actively working against their interests. From wage-manipulation & collusion, to selling sitting cheek-to-jowl with coworkers as "open" and "collaborative," there's enough to give even a naïve, "everything is awesome!!!," workaday programmer pause.
He always had the reputation of being a visionary and major league a**hole. I guess he's dead long enough now that we can acknowledge the latter again?
OK. I am actually a free market libertarian software engineer. This does bother me, but I would suggest that the solution to these sorts of problems is exposure rather than laws. I don't feel that my ability to market my skills is significantly affected. I don't need to work for any company that would underpay me. Even though these are big companies, the percentage of software engineers they hire is a small percentage of the total.
As far as examples of negative aspects of the free market go, this is pretty mild.
I would suggest that a free market approach would be to go one step further and have shareholders conspire to limit CEO salaries. Those cut into corporate profits as well.
The fuck does the political alignment of the douchebags involved have to do with the economic policies that allow the abuse.
If you have a party that says "repeal all murder laws" and a party that says "murder laws are okay, we should maybe have them"(the political economic balance in the US). You shouldn't be going "Ha! At least one murderer was for the anti-murder party." as if it settles the issue. It's retarded.
OK. I am actually a free market libertarian software engineer. This does bother me, but I would suggest that the solution to these sorts of problems is exposure rather than laws. I don't feel that my ability to market my skills is significantly affected. I don't need to work for any company that would underpay me. Even though these are big companies, the percentage of software engineers they hire is a small percentage of the total.
As far as examples of negative aspects of the free market go, this is pretty mild.
I would suggest that a free market approach would be to go one step further and have shareholders conspire to limit CEO salaries. Those cut into corporate profits as well.
Lots of luck.
A Corporation is NOT a one-person-per-vote democracy. It is one-SHARE-per-vote.
And guess who owns the majority of the shares in most corporations?
Yes..... Because all smaller shops are given money trees they can harvest infinite yields from when they form their articles of organization for their company/corporation.
OK. I am actually a free market libertarian software engineer. This does bother me, but I would suggest that the solution to these sorts of problems is exposure rather than laws.
This time they got caught out in a few emails, next time they will just keep it to verbal agreements on the country club golf course. The "exposure" is not going to come from a few or even many Engineers complaining in isolation that there might be some collusion going on as the alternative offers are drying up.
I don't need to work for any company that would underpay me.
and if you did you would not be able to get a decent higher paying job elsewhere due to collusion like this.
As a Technical Director (read: Guy in charge of a group of programmers), I know our company had similar agreements with other programming studios and technical firms in the geographical area we were located in. I learned of it by a slip of the tongue by our HR Director during a meeting.
I responded along the lines of "Well, if we would pay our programmers what they're worth after 3 years, instead of insisting on keeping them at Junior programmer rates, then we don't have a problem, and shouldn't need special back room deals to keep our talent". I unfortunately did not have the final say in pay increases, and did lose some of my staff to better payment offers. It was all I could do to compensate with treating the team with the highest levels of respect to keep them around due to shitty pay.
This was happening in Canada for context.
You're funny.
Only laws will prevent this from happening. Perceptions can be swayed by gradually introducing change and exposure and by gradually "normalizing" this obviously criminal activity. Exposure is not effective, it can be managed with enough positive spin. Only laws with strong deterients are effective.
You say about Apple, Google, Intel, etc. "the percentage of software engineers they hire is a small percentage..." I don't think you know what those companies do.
Collusion, by definition, is not a free market.
...And since collusion is natural behavior in situations like this for company managers, it follows that in order for a market to be free, the behavior of its participants must be regulated.
Which, seriously speaking, is a rather interesting point.
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Well, no. That is why we do not have a free market, pure free markets require a very idealized society where all sorts of things that states and regulation take care of simply do not exist, and thus are not very resilient when having to deal with other parts of the system. It is kinda like communism or anarchism... it would work great if humans were, well, not humans, and some magical force prevented defacto forces influencing things.
Collusion, by definition, is a free market.
And it's where markets will always go if the power players in the market are friendly/courteous rivals. It helps those at the top.
And it's exactly why truly free markets aren't good for the average person.
There are two types of people in the world: Those who crave closure
He won't.
Someone is gonna jailbreak him after a day or two.
-=This sig has nothing to do with my comment. Move along now=-
It is self-defeating but not for the reasons you mention, as noted by other replies.
The reason it is self-defeating is that suppressing the salaries in fields where you badly need talent downregulates the cultivation of additional talent, and if the particular class of worker in question has any sideways mobility, may cause talent to leave those fields for either higher pay or easier work. A deficit in skills, whether highly compensated or not, negatively affects your end product, and even if you are colluding with competitors, negatively affects the market volume since there is less demand for crappy product. (For example, there is less demand now for Google hosted services than there would have been if they had not made a habit/reputation of pulling the rug out from underneath released products.)
Someone had to do it.
and this stuff was going on back then. They actually told employees they were doing it at the meetings where they announced annual pay raises. My coworkers cheered while I was dumbfounded that people missed the big picture. In essence they were saying "we've fixed engineer salaries with other big employers in the area so don't bother looking to get a better deal elsewhere".
When I left HP I went to work for Fujitsu- they didn't participate in the salary fixing- and instantly got 40% pay increase and kept my vacation time.
So said Adam Smith, but we all know "Smith" was just a pseudonym for Karl Marx.
Which, seriously speaking, is a rather interesting point.
And one which many ideologues try very hard not to understand. "Free market" is more of a slogan than a clearly defined idea. I prefer the term "competitive market" to emphasize what's really important.
Perfectly spherical merchants, on a frictionless planar surface.
Not that interesting in practice. No one sane would argue that the CME commodities markets are not free markets. They're a shining example of free markets working well, doing the sorts of things that economic theorists expect (unlike much of the rest of the economy).
These markets have a bunch of regulations - the key is that most of the regulations are market rules, not laws, and the power of the government is mostly focused on fraud prevention, contract enforcement, and preventing counterparty payment risk (a critical subset of the previous items). What's not regulated is price, nor legal preference given to certain sellers - no government-granted monopolies. That's what makes a free market.
There will always be anarchists calling themselves libertarians, but mainstream libertarian though expects the government to provide contract enforcement, fraud prevention, and in general enough criminal law enforcement where it's safe to trade.
Socialism: a lie told by totalitarians and believed by fools.
What you're saying is something unsavory that businesses might do in a free market, isn't the free market. The free market means precisely that. Companies are free to collude, price fix, bribe, etc. It's only regulation that prevents it from happening. Just because you don't like one consequence of the free market doesn't mean you get to disavow it as part of the cost of doing business.
This is one of the primary fallacies of free market thinking; that businesses will be somehow compelled to do the right thing without the boot of the government on their necks.
I swear to God...I swear to God! That is NOT how you treat your human!
The "exposure" is not going to come from a few or even many Engineers complaining in isolation that there might be some collusion going on as the alternative offers are drying up.
The exposure doesn't need to come from engineers. It can come from anyone who knows about it.
The only reason we know about it at all is because there was a lawsuit filed accusing them of this illegal action. If it becomes totally legal, nobody's going to be filing that lawsuit in the first place, and the parties involved will continue to do it secretly.
You know, I think I'm going to start using 'competitive market' instead of 'free market'? In areas where competition is impractical, such as water/electricity to the house, I prefer that the provider be a cooperative. Otherwise most of the regulation methodologies I support are designed to increase competition.
I don't read AC A human right
I see you crossing the line from "libertarian" to "anarchist" if you don't see a legitimate role in the government preventing this sort of collusion. Much like there are rules on all the commodities exchanges, backed by laws, that prevent collusion to corner the market in any given commodity. It's a very minimal low-touch sort of role for the government to prevent this sort of thing.
Had this been 2 small companies no one cares about colluding, I wouldn't see much problem either, but this is a non-trivial portion of all software jobs in the valley, enough to distort the market. This is exactly why you're not allowed to control more than 10% (or whatever it is, but I think that's right) of a specific commodity contract.
Socialism: a lie told by totalitarians and believed by fools.
In this example, say that the employees of the colluding companies are making $100k/year whereas they are really worth $120k/year. Non-colluding companies can now easily poach these employees by offering them, say, $110k/year.
So let me get this straight:
- Without the collusion between employers, the employees would make $120K/year.
- With the collusion between employers, the employees would move to a different company and make $110K/year.
- Conclusion: The collusion between employers is costing the employees at least $10K/year.
That's not a self-correcting system, that's damages. The companies who colluded can easily attract talented people making less than $100K/year by recruiting in different areas of the country (where techies frequently make less than $100K/year), or different areas of the world (where techies make far less than $100K/year) via H1B, so they'd suffer some turnover but no major disruptions.
I am officially gone from
Well? Many engineers see themselves above and superior to manual laborers which unions typically represent. Also their superiority has convinced them that they will become C*Os and the like making LOTS of money. Little did they know there have been so many big companies and their leaders consolidating and conspiring to make their output less expensive.
There's a LOT wrong with the current tech market and NONE of it has to do with true free market capitalism and everything to do with seeking to get around it or controlling it.
When you casually look at the whole free market idea, you should quickly realize that the free market is very much pro-little-guy. When the little guy becomes the big guy, things become a LOT more expensive and perilous. Too many up and comping little guys for anyone to remain king of the hill for any amount of time...that is unless they start cheating.
In free market capitalism, it takes a lot of work and good ideas to get to the top. It takes a continuous flow of work and good ideas to stay there. But that's not what the kings of the hills want. Like Microsoft, they want to dominate a market and then get by making crap and spending their money on schemes to keep other people from competing with them. Not free market capitalism.
However, by the nature of collusion - where each participant has incentives to screw over the other participants, or non-participants can take advantage of the collusion - it is an unstable, temporary arrangement, and will fall apart sooner rather than later.
One of the alleged provisions of the arrangement was to punish companies that reneged on the deal by targeting its key engineers for recruitment. At that point what you have is regulation by cartel. This, by the way, was what government *was* before the advent of the modern democratic republic state. An aristocracy may spend nearly all of its time fighting itself tooth-and-nail, but it closes ranks against outsiders.
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A free market is a necessary, but not sufficient, component of a competitive market. And what we really want is an efficient market.
A “Free Market” is when 2 people freely exchange goods. The problem is that there is a asymmetry between the people. One buyer has superior knowledge, for example when selling a used car or house. The seller knows if the car is a lemon or not. Or because there is a difference in power. Thousands of employees on one side, a few companies on the other. By collusion the companies are increasing their power relative to the employees.
You can’t eliminate this asymmetry – it is the nature of the beast – but you can minimize it.
Could you say that again, except coherently this time?
Libertarianism is an attempt to solve the problem of providing safety and basic social order with the minimum possible government that gets the job done. It's an optimization exercise. There's very little agreement on what that looks like, exactly, but widespread agreement that fraud prevention and contact enforcement (and some sort of criminal justice system) are part of it.
Anarchism is the claim that we can have safety and basic social order with no central leadership at all (anarchy means "no leader", not "no laws"). I view this like Marxist communism: cool idea, wrong species.
Socialism: a lie told by totalitarians and believed by fools.
You either have no idea how the engineering job market works or are being deliberately obtuse.
These companies set the price for engineering hires throughout the valley. If they collude to keep salaries down, all other companies vying for engineering talent will not have to pay the market rate. In effect, they are guaranteeing themselves access to engineers at depressed wages by market manipulation.
And in the real world, you retain talent by paying for it. It doesn't work for free. If the talent is so freaking important, then pay for it. It will stay if you are paying as much or more than is available on the outside. If you are a business, and you have critical folks, you should be paying them like they are critical, not limiting their job options.
You would care about this if you were the talent in question, getting underpaid and reported for applying to another job. Imagine how many careers have been derailed in the valley by these HR departments reporting job seekers to their employers.
You would also care about this if you were a shareholder or current employee at one of the cartel companies, given that all who have applied for a job from one of these cartel companies to the other and been rejected now are a pain free class action waiting to happen. All who have had their wages depressed are a class action waiting to happen.
And in the end, everyone loses except the CxOs with their golden parachutes and the Blood Sucking Lawyers.
That's why this is fscking stupid and wrong. You can resume speculating about their motives, as though that means a gd damn thing.
andy